Correlation Between Echo Investment and Medicalg

Can any of the company-specific risk be diversified away by investing in both Echo Investment and Medicalg at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Echo Investment and Medicalg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Echo Investment SA and Medicalg, you can compare the effects of market volatilities on Echo Investment and Medicalg and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Echo Investment with a short position of Medicalg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and Medicalg.

Diversification Opportunities for Echo Investment and Medicalg

-0.41

Correlation Coefficient

Echo Investment  Medicalg

Very good diversification

The 3 months correlation between Echo and Medicalg is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and Medicalg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicalg and Echo Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Echo Investment SA are associated (or correlated) with Medicalg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicalg has no effect on the direction of Echo Investment i.e., Echo Investment and Medicalg go up and down completely randomly.

Pair Corralation between Echo Investment and Medicalg

Assuming the 90 days trading horizon Echo Investment SA is expected to generate 0.49 times more return on investment than Medicalg. However, Echo Investment SA is 2.03 times less risky than Medicalg. It trades about 0.07 of its potential returns per unit of risk. Medicalg is currently generating about -0.09 per unit of risk. If you would invest  411.00  in Echo Investment SA on September 4, 2024 and sell it today you would earn a total of  32.00  from holding Echo Investment SA or generate 7.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Echo Investment SA  vs.  Medicalg

Echo Investment SA

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Echo Investment SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Echo Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medicalg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicalg has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Echo Investment and Medicalg

The main advantage of trading using opposite Echo Investment and Medicalg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, Medicalg can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Medicalg will offset losses from the drop in Medicalg's long position.

The idea behind Echo Investment SA and Medicalg pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.